Projects on the chopping block include development and acquisition of biological and chemical detection systems, and protective clothing.

The Defense Department has shifted more than $1 billion out of its nuclear, biological and chemical defense programs to underwrite a new White House priority on vaccine development and production to combat disease pandemics, according to government and industry officials.

The planned funding reduction "terminates essential CBRN [chemical, biological, radiological and nuclear] defense programs ... required to meet high priority service needs, prevent casualties and protect against CBRN incidents," according to a Pentagon budget document drafted in early August.

Internal deliberations over the budget have been ongoing for months as the government prepares to submit its fiscal 2012 spending request to Congress next February.

"To implement the DoD response to the president's new [vaccine] initiative requires $1.07 billion" between fiscal 2012 and 2016, states the defense memo, obtained by Global Security Newswire.

The money was taken out of a wide variety of programs deemed "essential" for combating weapons of mass destruction, the document states. An additional $442 million was trimmed through efficiency reductions mandated by Defense Secretary Robert Gates, for a total of $1.5 billion cut from the counter-WMD account over the five-year period, according to the draft memo.

U.S. nuclear, biological and chemical preparedness efforts "cannot absorb the entire reduction without delaying both current and future force readiness by approximately six to nine years," states the memo.

Defense Department projects under the budget-cutting ax include the development and acquisition of biological and chemical detection systems; gear to decontaminate skin and equipment after exposure; systems to coordinate military operations in a chem-bio environment; and protective clothing for military personnel entering toxic areas, the document indicates.

Drafted by Andrew Weber, the Defense Department's senior official responsible for WMD defenses, the early-August appeal was aimed at securing funds from the Pentagon comptroller to replenish the affected programs. A Pentagon spokeswoman said neither Weber nor anyone from his office was available this week for interview.

"By diverting $1 billion from nonmedical [chem-bio] defense programs to this medical vaccine facility on top of the OSD efficiency cuts, Mr. Weber threatens to return the military forces to a state of unpreparedness that we haven't seen since 1996," said one longtime defense analyst, referring to the Office of the Secretary of Defense. Lacking permission to discuss internal government debates over budget plans, the source asked not to be named.

The memo reportedly has since been superseded by another, more limited plea, which instead seeks restoration of less than one-third of the eliminated WMD-defense funds.

The subsequent document also omits mention of the high-priority White House vaccine project, sidestepping what might be regarded as implicit internal criticism of the Obama funding priority on the Medical Countermeasures Initiative, the defense expert said. Led by the Health and Human Services Department, the new program aims to expand the U.S. capability to make lifesaving vaccines.

President Barack Obama noted the initiative in his Jan. 27 State of the Union address, saying it would "give us the capacity to respond faster and more effectively to bioterrorism or an infectious disease -- a plan that will counter threats at home and strengthen public health abroad."

The latest budget memo constituted "an attempt to pretend that [there] wasn't a [funding] trade between [the vaccine initiative] and the nonmedical projects," the defense analyst said. "No matter what [budget] memo gets up to the comptroller ... there still is a $1 billion reduction in nonmedical R&D and a $1 billion increase in [the Medical Countermeasures Initiative]."

Weber's latest budget-request memo left little chance the Pentagon will restore funding for WMD defense efforts outside of the vaccine project, the defense analyst speculated. Amid the myriad competing priorities in the Defense Department budget, "99 percent of the [appeal] memos don't make the cut," the veteran military-watcher said.

The issue could become politically contentious, though, when the Obama budget request moves up to Capitol Hill early next year and industry advocates begin lobbying on the matter.

"At this point, we don't know enough, but we are concerned about the impact on the industrial base," Amoretta Hoeber, a defense consultant and chair emeritus of the NBC Industry Group, said in an interview this week.

The August draft budget document suggests that production capabilities might indeed be affected, saying the reduction "creates gaps in the U.S. industrial base which will prevent timely response to future warfighter needs." Reconstitution of WMD defense production capacity "would require significant cost" and could affect "both schedule and performance," the memo states.

One project at risk of being affected, for example, is a program to procure protective suits for Army troops.

"Failure to fund this [more fully] will result in incomplete personal protective equipment ensembles, resulting in [chem-bio] exposure routes to service men and women," the August defense document states. "The over-garment is [funded]; however, this [sought-after restitution] buys out the remaining boots, gloves, socks and masks to complete the ensemble."

The Defense Department spokeswoman, who declined to be named in this article, said fiscal 2012 budget details were unavailable and "may not be provided until the president's budget is approved and released." The budget year begins Oct. 1, 2011.

Hoeber said that if the funding reductions result in shutting down production lines for any highly specialized WMD defense items, it is unclear how quickly the industry could reconstitute its manufacturing capability in the event that a new threat emerged.

"You don't want the system to willy-nilly impact the industrial base without a thoughtful assessment of whether that's the right thing to do," she said.

Meanwhile, the expansion of medical countermeasures against disease outbreak -- either naturally occurring or the result of a bioterror attack -- is a growing White House priority and apparent beneficiary of the slashed WMD-defense program funds.

Obama administration leaders launched the effort to expand vaccine capacity after last year's H1N1 flu virus scare, when the pharmaceutical industry was producing vaccine at record rates but nonetheless was outpaced by early demand. The flu pandemic ultimately petered out but if a more serious event occurred, casualties could be devastating as the industry struggled to produce sufficient vaccine stocks in short order, U.S. officials worried.

The H1N1 flu "vaccines were not broadly available before the virus had spread widely among the U.S. population," according to an HHS report released last week. It cites the continued use of "old technologies" for producing vaccines that "need to be enhanced or replaced."

The new initiative includes both HHS and Pentagon plans for constructing "Centers for Innovation in Advanced Development and Manufacturing," to help small biotechnology companies innovate new vaccines and field them more rapidly.

The modern facilities would also be capable of large-scale production of vaccine stocks during a public health emergency involving "emerging infectious diseases or unknown threats, including pandemic influenza," the HHS report states.

"New approaches to vaccine manufacturing, including the use of recombinant and molecular techniques and the use of new flexible, disposable manufacturing components and multiuse facilities, offer promising ways to meet the demands for efficient, expandable vaccine production capacity while simultaneously meeting needs related to other public health emergency threats," the report reads.

Plans call for Health and Human Services to open "several" vaccine development and manufacturing centers and for the Defense Department to open a single facility, either through new construction or refurbishment of existing buildings, according to Robin Robinson, director of the HHS Biomedical Advanced Research and Development Authority.

Health and Human Services will spend $478 million on building multiple facilities while the Defense Department will allocate $200 million to construct its lone site, Robinson said in a Wednesday phone interview. Both agencies are likely to release industry solicitations by the end of the year for long-term contracts to build and operate the facilities, he said.

By the end of 2011, 10-year-or-longer contracts should be signed for the HHS and defense facilities, Robinson said. Each center will be owned and operated by its respective contractor -- perhaps a university consortium with a pharmaceutical firm -- and will be located in the United States, he said.

Health and Human Services and the Defense Department have slightly different responsibilities when it comes to protecting the nation from disease outbreaks. The health agency is responsible for vaccines and treatments for the U.S. public, while the Pentagon oversees inoculations and countermeasures for the military.

There is an amount of overlap in the types of vaccines that the two organizations help develop and procure, but some items are of interest just to one agency or the other, Robinson said.

Both of the departments are concerned with protection from either naturally occurring disease or intentional bioterrorism acts, with the Pentagon particularly focused on safeguarding troops deploying to overseas locations where disease is endemic or the threat of attack with anthrax or other agents is heightened.

Though each facility might specialize in certain types of products, Robinson said he anticipated there would be HHS and defense work done at each location, regardless of which agency sponsored the site.

Over the next year, Health and Human Services and Pentagon leaders will sort out how they will split the operating costs for work performed at each of the centers, the health agency official said.

"Both HHS and DoD will share in funding the operating cost ... of all the facilities," Robinson told GSN. "We will be using these facilities for both DoD- and HHS-sponsored products."

He said the two agencies "haven't decided whether it's going to be a 60-40 or 30-70 split. That'll have to be worked out as we go forward."

Some observers think the Obama administration move to have the Pentagon build one of the vaccine centers is misplaced. Once the centers begin operating, pressure could grow on the Pentagon -- with an annual budget reaching $700 billion, by far the biggest spender of federal discretionary dollars -- to help bankroll flu vaccine for the general public, critics say.

"Ideally, the current proposed HHS facilities ought to be more than enough to address the national demands for pandemic flu vaccine," the defense analyst said.

Robinson acknowledged that each of the facilities must be capable of manufacturing flu vaccine, regardless of other countermeasure specialties it might have.

"These facilities needed to be able to produce, for the civilian population, pandemic influenza vaccine to augment our capacity that we had already invested in -- and had already become a reality here in the U.S. -- as a lesson learned from our H1N1 pandemic experience," he said.

Hoeber noted that the industry group she represents includes member companies not only reliant on WMD-defense dollars for a wide array of programs, but also firms involved specifically in the medical countermeasures sector. For that reason, the NBC Industry Group is taking no formal position on how the Defense Department funds should be spent, she said.

"Obviously, the role of government is to make these sorts of choices, but we want them made thoughtfully," said Hoeber, a former Reagan administration defense official.

Meanwhile, the Pentagon is left with deep budget cuts in a number of its WMD-defense efforts, and it remains unclear whether funds to backfill those project accounts will be identified, even after the fiscal 2012 budget request is delivered to Congress.

"No one is against a DoD facility to make military [biowarfare] vaccines," said the defense analyst who requested anonymity. "We all see the need, given the reluctance of pharmaceutical firms to invest in this area. However, such a requirement needs to be funded as a new initiative -- not taken at the expense of critically reducing research and development of new suits, masks, detectors, decontamination systems, collective protection shelters and information systems."

The Pentagon spokeswoman declined comment on any shifts in funds or priorities, but did say that the Defense Department "plays a key role in addressing this continuing challenge of bioterrorism and/or infectious disease."

Under the White House initiative, "DoD intends to develop a dedicated reliable, sustainable, and cost-effective capability, based on strategic partnerships with industry, to establish a facility for the advanced development and manufacturing of biological [medical countermeasures] to address national security needs," she said.

The Pentagon-sponsored center would also "provide surge capacity in the event of a national emergency or pandemic," she said.